Question

Shown below are several accounts from a company's ledger with each account preceded by an identification number, and a transaction completed by this company. Indicate the number corresponding to the account debited and the number corresponding to the account credited when journalizing this transaction.

1. Accounts payable
2. Accounts receivable
3. Allowance for doubtful accounts
4. Bad debt expense
5. Cash
6. Factoring Fee Expense
7. Interest earned
8. Interest expense
9. Interest receivable
10. Notes payable
11. Notes receivable
12. Sales

Transaction - Received a note on a past due account. The number corresponding to the account debited is ______________ and the number corresponding to the account credited is ________________.

Answer 1

In the transaction of receiving a note on a past due account, the account debited is 11 (Notes Receivable) and the account credited is 2 (Accounts Receivable).

Step-by-step explanation:

When a company receives a note on a past due account, it is converting an existing account receivable into a formal written agreement to pay, which is a note receivable. In accounting terms, this is reflected in the ledger by debiting the Notes Receivable account (since the company is gaining a promissory note asset), and crediting the Accounts Receivable account (since the past due amount is no longer simply an account receivable, but now has been formalized into a note). Therefore, in journalizing this transaction, the number corresponding to the account debited is 11 (Notes Receivable) and the number corresponding to the account credited is 2 (Accounts Receivable).

In this transaction, the account debited is Notes receivable and the account credited is Accounts receivable.